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Operating budget includes funding for priorities in health, compliance, recruitment/retention

University trustees Jan. 22 adopted a 2005-06 operating budget of nearly $950 million that includes special funding for health and well-being, compliance, and recruitment and retention.

The trustees acted on a budget proposal from President Shirley M. Tilghman, based on the recommendations of the Priorities Committee of the Council of the Princeton University Community. The committee, which is composed of faculty, students and staff and chaired by Provost Christopher Eisgruber, has served as the mechanism for recommending fiscal and programmatic priorities for more than three decades.

"The committee's recommendations ... focus on requests in three areas: responses to the work of the Task Force on Health and Well-Being; efforts to strengthen the University's compliance with its regulatory obligations; and our continuing commitment to recruit and retain the best faculty, staff and students," Eisgruber wrote in an introductory letter to the report along with Katherine Rohrer, vice provost for academic programs and executive secretary to the Priorities Committee.

The group recommended a slight increase in the faculty and staff salary pools along with the allocation of approximately $500,000 to fund its highest priority programmatic requests in an overall balanced budget. This amount is less than was available to the Priorities Committee last year.

"This year's committee found itself functioning in a delicate financial environment," according to the report. "A number of negative developments in the FY05 budget -- including sharply higher energy costs, higher-than-normal vacancies in graduate and faculty/staff housing and decreased income from indirect costs earned by sponsored research -- created an unexpected and unusually large projected deficit for the current year. Budget projections for FY06 showed a significant deficit for that year as well."

While the report said that the University's endowment enjoyed healthy returns during the 2004 fiscal year due to rebounding markets, it noted that the operating budget did not experience any "sudden influx of cash" as a result. Transfers from endowment income to the operating budget are controlled by a spending rule intended to strike a balance between present and future needs of the University. The amount of spending per unit of endowment increases each year by a stipulated amount, currently set at 5 percent. The improved performance of the endowment enabled trustees to avoid downwardly adjusting the rule.

The provost and the Priorities Committee, working with the finance committee of the Board of Trustees, developed a plan to respond to this fiscal situation. It includes cutting the contingency line in the budget, implementing measures to decrease energy consumption and filling vacant housing units, while keeping tuition increases as low as possible. Any remaining gap will be addressed by reducing transfers from the operating budget to the renovations budget.

Health and well-being

About half of the committee's $500,000 allocation will go toward initiatives intended to improve the health and well-being of the campus community.

In November, the University's Task Force on Health and Well-Being issued its final report that recommended several significant changes in University policies and programs to address the health care needs and promote the health and well-being of students, faculty and staff. The task force "made important, thoughtful and well-researched recommendations," according to the Priorities Committee, and the 2005-06 allocations are intended to help the University make "substantial progress" in this area.

Additions to the operating budget for University Health Services will provide for expanded psychiatric consultation services and increased summer coverage, among other crucial staffing needs.

Another allocation will fund the University's contribution to improve coverage provided through the Student Health Plan, which enrolls about 45 percent of undergraduates and all graduate students. The improvements will include an increased number of outpatient mental health visits and increased coverage for those visits, as well as a reduction in fees for dependents.

The University also has committed funds from other sources to support health and well-being initiatives (see related story).

Compliance

While Princeton has long taken compliance responsibilities seriously, the University recently strengthened its efforts in this area to deal with dramatic increases in the number of requirements and the higher standards to which institutions are being held. Laurel Harvey, a senior member of the administration, last fall was named chief compliance officer, and several University offices have taken active leadership with regard to responsibilities in this area.

The Priorities Committee, in an effort to "reinforce the University's capacity to advance these initiatives," approved funding to increase staffing in the Office of the General Counsel and the Office of Internal Audit.

Recruitment and retention

Several recommendations were aimed at improving the recruitment and retention of students, faculty and staff, and generally enhancing the quality of their experience at Princeton.

Two areas in particular that directly serve students -- Career Services and the Lesbian, Gay, Bisexual and Transgender Center -- will receive additional funds for staffing and operations.

The importance of competitive stipends in attracting the best graduate students (and in supporting faculty recruitment and retention) was recognized through additional funds designated for Centennial Fellowships. These honorific fellowships are used to draw top-ranked students to Princeton's graduate programs.

In addition, the committee recommended that the operating budget include a slight increase in the faculty and staff salary pools for 2005-06. "The committee recognizes the importance of competitive compensation to attracting and retaining the very best faculty and staff members," the report stated.

The committee also recommended an addition to the University library's budget for the acquisition of serials, books and electronic resources. The funds are intended to address the impact of "rapidly escalating costs of serials and periodicals as well as expenses associated with securing materials for emerging fields and new programs."

Tuition and fees

Recognizing the critical role that college costs play in student recruitment and retention, the Priorities Committee stated that it "is steadfast in its commitment to recommend as low a rate of increase in tuition and fees as is consistent with sustaining Princeton University's overall excellence."

For 2005-06, the committee recommended a 5 percent increase in the rate of tuition, room and board, which the trustees also approved. The rate of increase is slightly more than last year's 4.5 percent, and is lower than the average national rate of increase last year in both public and private institutions. According to the College Board, tuition and fees increased 6 percent at four-year private institutions and 10.5 percent at four-year public institutions between 2003-04 and 2004-05.

The report noted that the financial aid budget will be increased enough to cover these additional charges for students on aid. Students on aid only pay what they can afford, and the University has significantly enhanced its financial aid program in recent years to make a Princeton education even more affordable. Improvements have included replacing loans in financial aid packages with grants, decreasing the required annual contribution from student savings, eliminating home equity from the calculation of family assets and admitting international students on a "need-blind" basis.

The percentage of students on financial aid at Princeton increased from 38 percent of the class of 2001 -- the last class admitted before the improvements -- to a record 52 percent of each of the last two freshman classes. The average scholarship for Princeton students on financial aid is $25,400 in 2004-05, and some students receive much larger amounts -- scholarships of $37,000 or more. Even the students whose families can afford to pay full tuition at Princeton receive a discount, since the tuition they pay covers only about half of what their educations actually cost the University to provide.

Princeton's undergraduate charges will increase next year to $40,213, which is expected to be one of the lowest rates among its peers. Tuition will be $31,450, an increase of 5.15 percent; room will be $4,610, an increase of 6.8 percent; and board will be $4,153, an increase of 2.0 percent. Graduate tuition and fees are scheduled to increase by similar percentages.

In addition to increasing these mandatory fees, the University expects to raise two other fees paid by many students: the residential college fee, which is paid by those living in the colleges; and the premiums for the Student Health Plan. Both increases were recommended by the Task Force on Health and Well-Being as a means to accomplish some of its goals. The increase in the residential college fee, which has not yet been set, will support current college programming in a way that frees up general funds that can help fund the activities of a health educator and clinical nutritionist. The increase in the insurance premium, from $810 to $1,000, would help fund plan improvements.

The Priorities Committee report is available online as well as from the Office of the Provost.

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